US Account surplus

Which of the following transactions would contribute to a US current account surplus and why? Make sure that you justify, in each case, why the transaction would or would not contribute to a current account surplus.

a. IBM barters computers worth $100 million to Jamaica in exchange for hotel service worth $100 million on the island.

b. The US borrows $100 million long term from Europe to buy $100 million of European goods this year.

c. The US sells arms worth $100 million to Israel for bank deposits worth $100 million.

d. The US government makes a gift of $100 million to the government of Colombia, in the form of New York bank deposits, to pay for damages caused by US bombings in heroin plantations.

e. The European Central Bank buys $100 million in US-dollar bank deposits from a New York bank, paying by providing euro bank deposits to the New York bank.

Solution Preview

"Current account surplus" is Net Export reflected on the Balance of International Payments, which means if the export overpasses import, the transaction would contribute to US current account surplus.

Transaction (a) would not contribute to a US current account ...

Solution Summary

The solution considers several transaction and identifies which one contributes to the US current account surplus. A brief justification is also provided. The answer is concise and to the point.

Education

Recent Feedback

"Thanks for your fast response! That follows a lot with what I was thinking. There is still an argument made by a friend of mine for the number 9 that he swears is the only correct answer by using an "invisible multiplier"."

Please check this for me.
If the price of a good rises, then producer surplus
a. will increase
b. will decrease
c. will remain the same
d. may change but we can't tell how
it is a
If there is an increase in demand, total surplus
a. will increase
b. will decrease
c. will remain the same
d. may change but we can'

14. Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10 each. If they are sold to shareholders at $10 each, what would the capital surplus be?
A. $100
B. $900
C. $9,900
D. $10,000
E. $11,000

a) Assume countries U and Q are trading partners, and that there are no other countries in the world. The following functions represent the demand and supply functions for the currency of country U.
Supply of country U's currency :E = 1.3 - 0.1Qd
Demand of country U's currency :E = -1.1 + 0.2Qs
Where E = exchang

Please help me with the given microeconomics problem for an assignment:
There are six potential consumers of computer games, each willing to buy only one game. Consumer 1 is willing to pay $40 for a computer game, consumer 2 is willing to pay $35, consumer 3 is willing to pay $30, consumer 4 is willing pay $25, consumer 5 is

Indicate whether each of the following statements is true or false, and explain why.
A. In competitive market equilibrium, social welfare is measured by the net benefits derived from consumption and production as measured by the difference between consumer surplus and producer surplus.
B. The market supply curve indicates